Crude oil prices began to slip on Friday after Federal Reserve Chair Jerome Powell spoke for a mere 8 minutes, warning that there would be pain ahead.
"While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses," Power said in his Friday speech.
"Restoring stability will take some time," Powell warned, adding that "Reducing inflation is likely to require a sustained period of below-trend growth."
Powell vowed to continue tightening until inflation was sufficiently under control near the 2% target, and warned about premature loosening.
Missing from the speech, aside from the extra 22 minutes allotted for the speech and yet unfilled, was any explicit guidance from the Fed chair. Powell made no remarks on the size of the September rate hike.
Oil prices retreated following the speech, which was delivered at 10:00 ET.
The WTI September contract slipped $0.23 (-0.25%) to $92.29. While down on the day, WTI prices are still up roughly $3 per barrel from this time last week. Brent crude prices were also trending down, by $0.05 (-0.05%) on the day to $99.29 per barrel-also up roughly $3 per barrel on the week.
Crude prices began falling prior to Powell's speech in anticipation of a hawkish tone, supported by additional worry that the European Central Bank could raise rates by 75 basis points at its next meeting on September 8. Such a weighty rate hike from the ECB has contributed to the worry about demand.
Powell did stress that the Fed would slow rate hikes "at some point," but stressed that the Fed would need to see a lot more progress with reducing inflation before that happened.
By Julianne Geiger for Oilprrice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More